Current report no. 78/2017 of 27 November 2017 – Signing a letter of intent concerning settlement negotiations on ISOK

This current report was published via ESPI system on 27 November 2017, at 17:06

Management Board of Qumak S.A. (hereinafter referred to as the “Company”) informs that on 27 November 2017 there was signed a letter of intent concerning settlement negotiations and solving a technical support issue within the scope of the ISOK project.

These settlement negotiations are with regard to the contract of 29 August 2013 entered into between the Company and State Treasury – National Water Management Authority and Institute of Meteorology and Water Management – National Research Institute (hereinafter jointly referred to as the “Ordering Party”) concerning design, construction and implementation of an IT system of the country’s protection from extraordinary threats (hereinafter jointly referred to as the “ISOK”) as well as providing warranty service after implementation of this system.

The scope of negotiations cover all claims of the Parties which have been reported with regard to the execution of the ISOK system so far. In the letter of intent Parties confirmed their declarations concerning the scope and schedule of the conducted settlement negotiations. The intention of the Parties is completing the negotiations within 2 months. In the case of successful negotiations, the Parties are going to reach settlement in court. at the same time it was agreed that the Company will solve enumerated in the letter of intent technical support issues, however, this does not mean that the Company recognizes the Ordering Party’s claim.

The Company is in the dispute with the Ordering Party with regard to the ISOK project implementation since the Ordering Party sent on 28 June 2016 a letter to the Company on rescinding the performance of stage 5 of the ISOK project and in effect a note regarding calculation of a contractual penalty. The Management Board of the Company recognized the above mentioned statement as invalid and, as a result, questioned the grounds for calculating the penalty for rescinding the Contract for reasons attributable to the Company, indicating lack of factual and legal grounds to calculate the mentioned penalty. The Company requested the Ordering Party to begin the process of acceptance of the subject matter of the Contract, i.e. the performed ISOK system. Upon refusal on 11 October 2016 the Company filed in the Warsaw district Court a claim requesting payment pursuant to Article 639 of the Civil Code, by National Water Management Authority and Institute of Meteorology and Water Management on account of the Company of the amount of PLN 29,591.7 thousand together with statutory interest, on account of remuneration for performing the ISOK system.

Moreover, about the course of the dispute with the Ordering Party, the Company informed in the current report no. 23/2016 of 28 June 2016, 26/2016 of 22 July 2016, 28/2016 of 16 August 2016, 32/2016 of 11 October 2016, and 34/2016 of 21 October 2016.

Legal ground:

Article 17 section 1 MAR – confidential information.